HONG KONG: The yen pushed back to 18-month highs against the dollar on Friday as a weak US economic growth reading compounded the Bank of Japan's shock decision not to beef up its stimulus.
The Japanese unit surged Thursday after the BoJ stood pat on monetary policy, confounding expectations it would act after a double earthquake and a string of weak readings on the world's number three economy.
Later that day the Commerce Department said US first-quarter growth came in at almost half the rate expected, fuelling worries about the global outlook and turning investors to safe-bet assets, such as the yen.
In early trade the dollar fell to 107.12 yen at one point, its lowest level since October 2014, when the BoJ ramped up its already bulky stimulus programme. It later edged back up to 107.32 yen from 108.13 yen late in New York.
The euro was at $1.1385 against $1.1356. The single currency was meanwhile at 122.13 yen from 122.76 yen.
Analysts said the bank would likely try to talk the yen down following the unit's ascent, as it did earlier this month when it rallied.
"I expect to hear of 'BoJ checking' today so they can remind the market that the BoJ and Ministry of Finance aren't on holiday," Ray Attrill, co-head of currency strategy at National Australia Bank in Sydney, said.
"I doubt we'll see intervention this side of 100 yen per dollar and then only if we are seeing out-sized intraday volatility."
Japanese leaders have baulked at stepping in to weaken the unit, keen to avoid accusations that it is trying to support its exporters. A strong yen makes Japanese firms' goods more expensive overseas and hammers their repatriated profits.
Thursday's decision has fuelled worries that it is running out of ideas on how to kick-start growth in the Japanese economy, with its January move to negative interest rates slammed as being a desperate throw of the dice.
"The BoJ's inaction does reinforce the perception in the near term that perhaps the central bank is running out of ammunition," Sim Moh Siong, a foreign-exchange strategist at Bank of Singapore, told Bloomberg News.
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